Trade deficit ballooning out

New Zealand's trade deficit in August almost hit a billion dollars, Statistics New Zealand reported today.

The deficit came in at $961 million, well worse than the $780m economists had forecast.

The monthly shortfall pushed the August year deficit up to $6.547 billion, slightly down from $6.735 billion in the July year but again worse than economists' forecasts of $6.4 billion.

New Zealand is again smarting from the rise in crude oil prices.

The largest contributor to the increase in imports was petroleum and products. Despite the irregular nature of petroleum shipments, this was the seventh month in the last eight when petroleum and products had the highest value for any import commodity.

The deficit in August 2005 was slightly worse than this year at $1.1 billion. However, this year's deficit equated to 35.3 per cent of exports and was the second largest on record for an August month. It compares with an average deficit of $484m (20.9 per cent of exports) over the past decade.

The annual trade balance equated to a deficit of 19.6 per cent of exports. As a percentage of exports, this is the lowest annual deficit since September 2005, but the highest for an August year since 1976.

The monthly deficit was despite a 15.4 per cent rise in exports in August to $2.723 billion.

Imports rose 6.4 per cent to $3.685 billion.

A drop in the New Zealand dollar has an upward influence on prices for both imports and exports. The New Zealand dollar Trade Weighted Index was 9.6 per cent lower in August 2006 than in the previous August and was likely to have influenced values for all import and export commodities, SNZ said.

The rise in both exports and imports was broadly based with 32 of the top 40 import commodity groups and 34 of the export groups showing increases over August 2005.

- NZPA